Our role and approach
The examination of the cost estimates of the bills by the Parliamentary Budget Office (PBO, hereinafter) is based on the provisions laid down in the Rules of Procedure of the Parliament of Georgia governing the legislative process within the Parliament, as well as the rules set out in the Law of Normative Acts of Georgia concerning the minimum requirements for the explanatory notes of the draft laws. This function is thereby directly tied to the legislative process.
In particular, as set out in Article 17 (Clause 1, Part b) of the Law on Normative Acts, the explanatory note supplementing the draft law, among other components, should include the assessment of the medium term financial impact of the bill (the year the draft law is expected to be enacted and the next 3 years) specifying the following:
- Source of funding of the expenses related to the adoption of the bill;
- Impact of the bill on budgetary revenues;
- Impact of the bill on the budgetary expenditures;
- New financial commitments of the State, indicating the direct financial liabilities (internal or foreign liabilities) to be assumed by the State or an entity within its system, on the basis of the bill;
- Expected financial impact of the draft law for the segments that the bill applies to, specifying the nature and direction of the impact on private and legal entities directly affected by the actions proposed by the bill;
- Amount of a tax, duty or another fee (financial payment) proposed by the bill, to an appropriate budget level and the principle for the calculation.
As laid down in Article 102 of the Rules of Procedure of the Parliament, Parliamentary Budget Office is responsible for expressing opinions on compliance of the explanatory note with the abovementioned rules as set out in Law on Normative acts. Furthermore, Parliamentary Budget Office is authorized to produce independent assessment of the financial impact of the bill in specific cases, based on its judgment on the materiality of potential impacts.
Aiming to ensure that the work of PBO is based on transparent, unbiased and consistent methodological framework and to enhance the quality and comprehensiveness of the information presented to the Parliament which in turn is a cornerstone of informed and better policy decisions, PBO developed two guidelines covering its role and the roles of the sponsors of the bills in the legislative process:
- Examination Guideline governing the work of the PBO – The guideline lays down the main principles and procedures for the examination of the impact estimates and relevant framework for expressing its opinions. In particular, the examination includes thorough evaluation based on the following criteria: whether the assumptions form the appropriate basis for the impact estimates, whether the impact is estimated properly based on the proposed assumptions and whether the disclosures are appropriate. The guideline distinguishes among three types of opinions: unqualified, qualified and adverse opinions based on the abovementioned criteria and pre-defined decision tree. The guideline forms an integral part of the PBO work and applies to all bills subject to the PBO examination.
- Preparation Guideline governing the work of the sponsor of the bill – The guideline outlines the main principles for the preparation of the impact estimates spelling out details what the requirements set out in Law of Normative Acts imply. The Preparation Guideline is not binding, rather aims to support the sponsors and those involved in the law-drafting process to ensure the explanatory notes show the appropriate assessment of potential impacts of the bills.
Please see the complete guidelines for more details (available in Georgian).
